US$1 billion hydropower project in Laos reaches financial close

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The US$1 billion Nam Theun 1 hydroelectric power project has reached financial close. The project is being developed by Phonesack Group. Co. Ltd. and Electricity Generating Public Company Limited (EGCO) and involves the construction of a 670 MW hydroelectric plant on the Nam Kading River, about 33 km upstream from its confluence with the Mekong River in the Borikhamxai province of Laos. 

Financing was provided by Bangkok Bank, Export-Import Bank of Thailand, Siam Commercial Bank and TISCO Bank. The lenders were advised by Clifford Chance and Chandler MHM. Allen & Overy advised the project owners. 

This follows EGCO's announcement in December that it had signed a financing agreement for the project for US$934.5 million with undisclosed commercial banks.

Italian construction firm Cooperativa Muratori e Cementisti (Cmc) di Ravenna is completing construction works for the project. The dam will have a capacity of four million cubic meters, and the 670 MW hydroelectric power station will have design discharge of 514 m³/sec. The company expect the works to take 56 months. Commercial operations are scheduled for 2022.

In September 2017, the project owners secured 27-year power purchase agreements with the Electricity Generating Authority of Thailand (EGAT) and Electricité Du Laos (EDL) for 514.3 MW and 130 MW capacity, respectively.

This financial close coincides with Laos' assesment by the United Nations Committee for Development Policy as having fulfilled the criteria for graduation from Least Developed Country (LDC) status for the first time, announced last month, due to increases in the country's Gross National Income (GNI), Human Assets Index and Economic Vulnerability Index.  Sufficient energy supply, especially for electricity generation, is key to sustaining this economic and human development.

Hydropower is sure to contribute significantly to increasing Laos' installed capacity. The International Hydropower Association estimates that the country's theoretical hydropower potential is 26.5 GW.